Meeting the Wool Innovation Challenge

Speech by the Australian Deputy Prime Minister and Minister for Trade, The Hon Tim Fischer at the

Opening of the International Wool Secretariat's European Development Centre

Milan, Italy, 15 May 1998

Ladies and Gentlemen

I would like to begin by thanking the International Wool Secretariat (IWS) for inviting me to open the European Development Centre. It is both an honour and a privilege to be here

The IWS is also to be congratulated for its foresight in establishing the Centre in Biella and Prato. These two towns have long and established links with Australia's wool industry. It is here that the very finest Australian wool is made into the very finest fabrics.

The Centre's opening marks a watershed in the cooperation between Australian wool growers and the spinners and weavers of Biella and Prato.

I am delighted to be in Milan as the region is world renowned as a leader in textile manufacture, fashion and design.

Milan's expertise in wool textile manufacturing goes back to when the city was established in the seventh century BC. A connection reflected in the city's former name ``Mediolanum'' which I understand translates as ``middle wool''.

Through the centuries, the people of this region have developed fine skills and nurtured strong traditions. It is these traditions of skilled craftsmanship, fine design, adaptation and innovation which hold the key to the success of the wool apparel manufacturing industry.

I am delighted that the European Development Centre means that Australia will be increasingly linked to this proud Milan tradition.

The Australian Wool Industry

Over the past two hundred years, Australia has nurtured its reputation as the largest producer and exporter of fine merino wool in the world.

Throughout that period, Australian growers have battled hard against the vagaries of nature: drought, flood and fire; and against the uncertainties of international markets.

Through it all, Australia has earned a reputation as a stable and reliable supplier of high quality raw materials. This is a great tribute to our wool exporters.

The Australian Government has worked with the wool industry to continually improve the quality and competitiveness of our exports. This has been achieved through research and development, through programs aimed at opening new markets, and through programs to encourage wool growers to provide a product that is tailored even more to meet the buyers' demands.

Wool pack contamination has been one issue on which we have been working. Following discussions with European processors last year, I am glad to say, that from July 1998, the Australian wool industry will be progressively moving towards non-contaminating wool bales. This process will be completed by June 2000.

I see this as a very positive response by Australian industry to meet European processor requirements. Also to be introduced is a bale identification scheme which will significantly improve information flows between consumers and producers.

We are also making progress with market reform. We believe that the industry must further embrace electronic marketing, forward selling and better market risk management techniques to further improve its competitiveness in international markets.

I am happy to say that the sale of the wool stockpile is in its last stages, and the winding up of Wool International by the year 2000 will be a major signal to industry of the primacy of free market forces.

But it is also timely to remind you that this has the potential to increase market volatility and that we should plan accordingly. I hope that Italian, and European buyers generally, will be at the forefront of stepping up the forward purchasing of Australian wool.

However, the most immediate challenge facing the Australian Government is to improve the efficiency of our ports, to bring the waterfront into line with international best practice.

We are committed to waterfront reform and I am certain it will be to the ultimate benefit of the industry and will enhance the competitiveness of our exporters.

The IWS European Development Centre

The Australian government and Australia's industry place a high priority on innovative research and development.

The Australian Government jointly supports IWS research programs through its contribution last year of A$11.2 million -that's 13 billion lire - to the Australian Wool Research and Promotion Organisation.

The European Development Centre will build on this by further cementing Australia's relationship with our European partners and allowing a more effective transfer of research, innovation and technology to the industry. Through this new partnership, the IWS will be better able to promote wool as the fibre of first choice in the production of a diverse range of textiles.

As the second largest buyer of Australian wool, and a major wool consumer, Italy is an important market and our most important partner in promoting wool textiles.

Indeed, Europe generally remains critically important to Australia as the largest consumer region of our wool.

It is of concern that wool consumption has declined in Europe in recent years, but the selection of the Milan region as the site for the Development Centre means the IWS is now close to the major wool manufacturing areas of Europe and ideally placed to promote its product.

Challenges Ahead

The next decade will see the global consumer and textile market undergo rapid change.

The industry must confront the challenges posed by a general move by consumers to more casual wear. We must learn to appeal to younger consumers and we must learn to better compete with synthetics, which are cheaper and improving in quality.

If wool textiles are to continue to be a fabric of choice, the industry must strive to make it an easy choice for the consumer. It must continue to innovate to meet consumer expectations. It must continue to produce better quality products - more cheaply, by developing innovative designs and new technologies.

Research and development is crucial to this. International Wool Secretariat research and development initiatives have formed the genesis of a host of new fabric possibilities and the market realisation of new products such as wool plus lycra, sports wool, washable wool, and wool blends.

The Australian government, as a major provider of R&D funds, is proud of its role in these innovations.

Lastly, we must continually promote our product. The IWS has a record of strategic consumer research which has directly driven its technical and marketing programs. This centre, like its counterpart in Japan, is an important part of the IWS strategy in driving the wool industry down the path of innovation in product promotion.

I must say, however, that I do not believe we have yet gone far enough. I would encourage the international wool textile industry to become more closely linked into Australian research and development, and to become a contributing party to it. Wool producers should not have to carry the full burden of both processing and product development research.

There is, therefore, an important role for other parts of the industry to play, to become even more closely involved in wool research. This is a challenge I throw out to international and Australian industry - to find a way to make this happen. This Centre is an excellent start.

In conclusion, let me once again congratulate the IWS and the townships of Biella and Prato who have worked together to establish the European Development Centre.

Thank you.